Corporate Banks Perspective On The FiT by Don Roberts of CIBC World Markets Presented at the Green Energy Act Finance Forum on January 29th, 2010

1. A Corporate Bank’s Perspective On The Feed-in-Tariff
Landscape For Renewable Energy
Green Energy Act Finance Forum
Toronto
January 29, 2010
Don Roberts
Managing Director, CIBC World Markets Inc.
CIBC World Markets Inc.
613-564-0827 FOR INSTITUTIONAL CLIENT USE ONLY.
don.roberts@cibc.ca NOT FOR GENERAL DISTRIBUTION.
See "Important Disclosures" section See "Price Target Calculation" and "Key
at the end of this report for important Risks to Price Target" sections at the
required disclosures, including end of this report, or at the end of each
potential conflicts of interest. section thereof, where applicable.

2. Before The FiTs, Where Was The Capital Flowing?
Other low carbon
Efficiency tech & services
1.8% Other low carbon 2.9%
Global
Biomass & Waste
Other renewables tech & services
Other renewables 2.3%
5.1% 1.2%
U.S.
3.9%
Biomass & Waste Efficiency
6.9% 6.5%
Wind Biofuels
Biofuels
42.8% 10.5% Wind
13.3%
46.0%
Solar
Solar 27.9%
28.9%
Renewable Energy Investment (2008)
Efficiency Other low carbon
4.6% tech & services
Biomass & Waste
1.1%
Compared to the U.S. and the rest of
the world, Canada has attracted
7.1%
Canada
Other Renewables
8.0%
relatively more investment in wind
Solar
8.3%
and biofuels/biomass, and relatively
less in solar.
Wind
55.3%
Biofuels This partly reflects differences in
endowments of renewable
15.5%
resources.
Source: New Energy Finance.
Don Roberts 613-564-0827 don.roberts@cibc.ca CIBC World Markets Inc. 2

3. Ontario’s Feed-in-Tariffs: International Comparison
600 539
500 443
396
400 340
/M H
319 320
$ W
300
200 135 138 133
159
130 125
159
92 90
73
100
0 11
0
B ms < 0 W
W d
L n fill G s
io a s
o r ro n )
S la (ro f)
>0 W
S la (g u d
50 W
in
a
B ms
o r o
io a s 1 M
1M
50 W
5 w
>0M
>M
>0M
a d
Source: New Energy Finance.
Ontario Germany Spain
Compared to other jurisdictions,
• Wind and solar get the most favorable rates
• Biomass is generally in line
• Landfill gas gets the worst
• …… and nothing for geothermal
Given the levelised cost of energy, expect a greater supply response in wind and solar
than for biomass or landfill gas.
However, given the FiTs, some new small-scale CHP biomass gasification technologies
can likely generate a ROCE of over 20%.
Don Roberts 613-564-0827 don.roberts@cibc.ca CIBC World Markets Inc. 3

4. FiT Programme Un-Capped?
FiT Programme is officially “un-capped”…government has
adopted a “take-all comers” approach.
Really?
• Even if transmission were not constrained, there is
ultimately a provincial government budget constraint.
• Public finances throughout the developed world have
deteriorated and will get worse before they better.
• FiTs are essentially an unfunded liability with a long
tail.
Don Roberts 613-564-0827 don.roberts@cibc.ca CIBC World Markets Inc. 4

5. Do We Want To Play?
CIBC has a strong background and long history in general
project finance. We are also serious about expanding our
presence in the renewable energy space.
• We think a structural shift toward a low-carbon economy
is underway.
• We see significant opportunities for financing renewable
power in Canada – could well surpass conventional
power.
• Overall market potential in Canada of ~$20 billion over
the next five years?
• Have recently hired experienced project financiers with
a background in renewable energy (e.g., wind) to
supplement our team.
• Part of a firm-wide initiative to examine opportunities
and execute in the space – project finance, M&A, IPOs.
…..We intend to play
Don Roberts 613-564-0827 don.roberts@cibc.ca CIBC World Markets Inc. 5

6. What Matters?
Transmission Matters:
• Lack of transmission lines is a key constraint – beware of
stranded projects
• Samsung Effect:
• Less transmission capacity available for other large
projects.
• Market will have to focus more on smaller projects
(which have distribution lines to existing transmission
lines) than would otherwise be the case.
Operating Experience Matters:
• Contrary to what the Toronto Star says, PPAs are not the
same as a Government of Ontario bond.
• There is operating risk, especially when operating over
many sites.
• Ontario is not Spain – technology risk varies with location
(e.g., how will solar units perform after a couple of
winters?)
• Warranty packages from manufacturers?
Don Roberts 613-564-0827 don.roberts@cibc.ca CIBC World Markets Inc. 6

7. What Matters?
Size Matters:
• Same due diligence and documentation effort for small &
large deals – economies of scale for the financier.
• Utility scale wind & solar projects can get project financing.
• Small scale biomass-based projects may actually be easier
than large-scale due to reduced fuel price risk.
• Solar roof-top is challenged.
• Especially for small developers without experience and
little equity.
• Role of land owner/building owner? (What if they go
bankrupt? Structural integrity of roofs?)
• Factor in re-stallation of solar panels if the roof must be
replaced over the duration of the 20-year PPA.
• Real estate bankers may do this, but unlikely
infrastructure bankers will.
Don Roberts 613-564-0827 don.roberts@cibc.ca CIBC World Markets Inc. 7

8. What Matters?
• Time Frame Matters:
• Lifecos may go for the full length of the PPA.
• Corporate banks will be shorter term (7-8 years?),
which means re-financing risk should be considered.
(However, banks can generally go for larger amounts
than lifecos.)
• Clarity On Details Of The PPA Matter; e.g.,
• Domestic content validated only after the project is
complete.
• Curtailment provisions.
• Relationships Matter:
• Expect first capital to go to existing clients
– especially bigger projects sponsored by proven
developers.
Don Roberts 613-564-0827 don.roberts@cibc.ca CIBC World Markets Inc. 8

9. Representative Terms?
• Terms are set by the market.
• They are always subject to change, but what are
representative numbers for good onshore wind projects
for an established developer in January 2010?
• ~75% debt (definitely under 80% and lower if poorer
project/less experienced developer).
• Term-load spread 300 bps-500 bps (In U.S., hit 600
bps-700 bps during the 2008 crash).
Don Roberts 613-564-0827 don.roberts@cibc.ca CIBC World Markets Inc. 9

10. Concluding Thought
In response to “Climate-Gate”, new research
has been done in Fort McMurray on the TRUE
cause of global warming…..
Don Roberts 613-564-0827 don.roberts@cibc.ca CIBC World Markets Inc. 10

11. …it should have been obvious to any objective observer.
Don Roberts 613-564-0827 don.roberts@cibc.ca CIBC World Markets Inc. 11

12. Appendix: Bio Of Don Roberts
! Mr. Roberts is a Managing Director with CIBC World Markets Inc. He is frequently described
as a “thought leader” in the both the global forest products and bio-energy industries. From
1992-2008 he led a team of analysts in advising financial institutions (e.g., pension/mutual
funds) on their investments in the global paper & forest products industry. In institutional
investor surveys he was consistently ranked among the top in the industry.
! During a sabbatical year in 2009, Mr. Roberts focused on two projects:
— On behalf of the Forest Products Association of Canada he led the Future
BioPathways Project which examined transformational strategies for the
Canadian forest industry.
— On behalf of CIBC Inc he developed a business plan for the creation of a Clean
Energy franchise.
! In addition to his work with CIBC World Markets Inc., Mr. Roberts is also
— An Adjunct Professor in the Department of Forest Resource Management at the
University of British Columbia (Vancouver);
— On the Board of Executives of the Sloan Center for Paper Business and Industry
Studies at the Georgia Institute of Technology (Atlanta, Georgia);
— On the Board of Directors of the Rights & Resources Institute (Washington, D.C.)
and
— Serves in an advisory capacity for a range of government, industry, and NGO
groups.
! Mr. Roberts has a Bachelor’s degree in Agricultural Economics from the University of British
Columbia, a Master’s degree in Forestry Economics from the University of California at
Berkeley, and both an MBA and doctoral studies in International Finance and Economics
from the University of Chicago.
Don Roberts 613-564-0827 don.roberts@cibc.ca CIBC World Markets Inc. 12

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Don Roberts 613-564-0827 don.roberts@cibc.ca CIBC World Markets Inc. 13

14. CIBC World Markets Inc. Stock Rating System
Abbreviation Rating Description
Stock Ratings
SO Sector Outperformer Stock is expected to outperform the sector during the next 12-18 months.
SP Sector Performer Stock is expected to perform in line with the sector during the next 12-18 months.
SU Sector Underperformer Stock is expected to underperform the sector during the next 12-18 months.
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Sector Weightings**
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"Speculative" indicates that an investment in this security involves a high amount of risk due to volatility and/or liquidity issues.
***Restricted due to a potential conflict of interest.
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15. Ratings Distribution*: CIBC World Markets Inc. Coverage Universe
(as of 29 Jan 2010) Count Percent Inv. Banking Relationships Count Percent
Sector Outperformer (Buy) 113 45.2% Sector Outperformer (Buy) 106 93.8%
Sector Performer (Hold/Neutral) 111 44.4% Sector Performer (Hold/Neutral) 97 87.4%
Sector Underperformer (Sell) 18 7.2% Sector Underperformer (Sell) 16 88.9%
Restricted 8 3.2% Restricted 8 100.0%
Ratings Distribution: Paper & Forest Products Coverage Universe
(as of 29 Jan 2010) Count Percent Inv. Banking Relationships Count Percent
Sector Outperformer (Buy) 3 18.8% Sector Outperformer (Buy) 3 100.0%
Sector Performer (Hold/Neutral) 11 68.8% Sector Performer (Hold/Neutral) 11 100.0%
Sector Underperformer (Sell) 1 6.3% Sector Underperformer (Sell) 1 100.0%
Restricted 1 6.3% Restricted 1 100.0%
Paper & Forest Products Sector includes the following tickers: ABWTQ, CAS, CFP, CFX.UN, CTL, IFP.A, LPX, MERC, NBD, SFK.UN,
SXP.UN, TMB, TRE, TWF.UN, UFS, WFT.
*Although the investment recommendations within the three-tiered, relative stock rating system utilized by CIBC World Markets Inc.
do not correlate to buy, hold and sell recommendations, for the purposes of complying with NYSE and NASD rules, CIBC World
Markets Inc. has assigned buy ratings to securities rated Sector Outperformer, hold ratings to securities rated Sector Performer, and
sell ratings to securities rated Sector Underperformer without taking into consideration the analyst's sector weighting.
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